The City of Detroit should create a water authority on its own and without the consent of its neighboring counties, an investment banking adviser for retirees suggested in a confidential document obtained by the Free Press.

The document, authored by investment banking firm Lazard on behalf of the U.S. government-appointed Official Committee of Retirees in Detroit’s bankruptcy last fall, said the water deal proposed by emergency manager Kevyn Orr last fall favored suburban county residents over city services.

Orr has publicly proposed to transfer the water department to an independent authority governed by Detroit officials and county leaders. The authority would pay $47 million per year for 40 years to the City of Detroit in a offer designed by investment banker Kenneth Buckfire.

Lazard said the city should force a deal that’s more lucrative for creditors and city residents on to Oakland, Macomb and Wayne counties.

Lazard accused the city of structuring the proposed spinoff of the water department as a “multibillion dollar windfall” for suburban residents, amounting to a political handout to avoid huge rate increases. Lazard said Orr structured his offer to provide the counties a 75% discount on what the department is actually worth.

The “system cannot be replaced or recreated in any reasonable timeframe or on a rational economic basis,” said Lazard, whose leading adviser is renowned labor negotiator Ron Bloom, a former member of President Barack Obama’s auto task force.

But Lazard argued privately that the city could get much more, even though the water and sewer department carries significant legacy costs and infrastructure needs.

“The city can pursue a new authority structure with similar economics ... without the consent of the counties,” Lazard said in a January 2014 assessment.

Although Lazard says they’re getting a good offer, the counties have publicly opposed the deal, saying they haven’t received enough information about the deal and that they aren’t inclined to pay for Detroit’s problems.

Macomb County Executive Mark Hackel said Friday that he’s not sure what information Lazard used for its assumptions.

“I would love to see that study,” Hackel said. “We’ve never seen such an in-depth study that would show it’s such a benefit to the subusbs. Everything we’ve seen and are hearing about is contrary to what they’re claiming.”

After Hackel and other suburban leaders initially sought to block the authority, the counties have since agreed to court-ordered mediation with the city. Simultaneously, Orr is considering a potential privatization of the department.

A spokesman for Oakland County Executive L. Brooks Patterson said his office would have no comment, citing confidentiality requirements in mediation talks.

One group of water ratepayers representing communities such as Royal Oak, Troy, Livonia and western Wayne County townships has publicly supported Orr’s deal, saying it would help prevent rate increases.

But Lazard said the authority could be forced upon the counties, arguing that Judge Steven Rhodes would deem the plan “lawful and appropriate” and that rate increases are inevitable because Detroit charges substantially less than communities like New York and Washington, D.C.

Lazard argued that most, “if not all,” creditors would support the deal.

Bill Nowling, a spokesman for Kevyn Orr, declined to discuss the issue.

“The city does not comment on the discussions held during federal mediation because to do so would be a violation of a federal order barring the parties from commenting on or releasing information from those mediation sessions,” Nowling said.